SEC Rejects VanEck Bitcoin Spot ETF Due To Fear Of Market Manipulation
The U.S. Securities and Exchange Commission (SEC) has rejected a proposed effort to list a spot bitcoin exchange-traded fund. The commission released a disapproval letter citing investor protection concerns and the lack of manipulation prevention in the market.
The VanEck spot bitcoin exchange-traded fund (ETF) has been rejected by the Securities and Exchange Commission (SEC), according to a disapproval letter released on November 12.
The fund sought direct bitcoin exposure by holding BTC and offering related shares to U.S. investors. However, the SEC hasn’t conceded to the public’s demand and remains skeptical of such an offering.
“This order disapproves the proposed rule change. The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), in particular, the requirement that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”
The SEC further explained that an exchange seeking to offer a spot bitcoin ETF in the U.S. could meet such obligations by demonstrating that it has a “comprehensive surveillance-sharing agreement with a regulated market of significant size” related to bitcoin.
That rationale echoes the agency’s thinking when it shot down a proposed bitcoin ETF from Cameron and Tyler Winklevoss several years ago. At the time, the SEC said that market manipulation concerns needed to be addressed before a spot product could be approved.
Friday’s decline comes soon after the SEC cleared the runway for ETF products centered around bitcoin futures. In recent comments, SEC chair Gary Gensler had expressed openness toward bitcoin futures-based ETFs as opposed to spot ETFs.
SEC is currently reviewing several other spot bitcoin ETF proposals.
